Welcome to the City of Dallas, Texas Meeting...• Project Plan and Reinvestment Zone Financing Plan originally approved August 2005, amended May 2013 to increase budget for district

The Olympic Project (1401 Elm Street)

Downtown Connection TIF District

Economic Development Committee

January 6, 2014

2

Purpose

• Provide background information on Downtown

Connection TIF District

• Review the Olympic Project

• Review Budget Status of Downtown Connection

TIF District

• Obtain Economic Development Committee’s

approval for consideration of the project by City

Council on January 22, 2014

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Downtown Connection TIF District Background

• Created June 2005

• Project Plan and Reinvestment Zone

Financing Plan originally approved

August 2005, amended May 2013 to

increase budget for district

• Expires December 31, 2035, or

when approximately $514.9 million

in TIF increment has been collected

(NPV of $231.6 million)

• Established to fund projects creating

a greater density/critical mass of

development within an expanded

Downtown core with focus on

strengthening connectivity

to/between the core and growing

downtown areas

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Downtown Connection TIF District 1401 Elm Street Building Background • Construction began 1961; building opened in 1965

• Designed by George L. Dahl originally for First National Bank of Dallas

• Closed January 2010 after Bank of America’s lease ended December 2009

• Environmental study conducted 1991 showed asbestos containing materials present in

the building

• Largest vacant contiguous block downtown

• City Council approved $30M in TIF funding for redevelopment of building in 2011;

developer unable to make project work financially

• September 2013, Olympic 1401 Elm Associates, LLC entered into contract to purchase

the building and single ground lease for the property

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The Olympic Project Project Description • 1.5 million square foot building has 52 floors (2 floors underground)

• Mixed use redevelopment:

• Residential – 512 Units (levels 11 through 48)

• Office Space – 71,133 square feet

• Retail/Restaurant Space – 71,555 square feet

• Interior Public Space – Outdoor plaza on portion of 9th floor and Observation

deck on 5th floor

• Parking – 925 spaces (basement and levels 6 through 8 of building’s podium)

• Project Cost: $151,283,000

• Start Construction: 08/2014

• Complete Construction: 12/2016

• Design Review: Design Peer Review Panel (10/25/2013) reviewed and

approved design of project

• Historic Tax Credits: Developer has elected to forgo applying for Historic

Tax Credits for project to allow for greater flexibility in building design

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The Olympic Project Project Design

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Akard Street Elevation - Existing

Corner of Elm and Field Street - Existing

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The Olympic Project Project Sponsorship – Olympic Property Partners

• Olympic Property Partners, a New York based full-service, vertically integrated

company with expertise in all facets of development, ownership and management of

commercial real estate.

• Principals have developed and/or owned over ten million square feet of commercial property,

including residential, office, retail and hospitality

• Has both the financial strength and development expertise to redevelop the building

• Headquarters located at Olympic Tower in midtown Manhattan with satellite offices in

Stamford, CT and London, UK.

• Olympic Property Partners Principals

• Seth Weinstein - real estate financier, developer and entrepreneur spanning almost 35 years;

Mr. Weinstein has developed and repositioned millions of square feet of real estate involving

complex environmental, historical and innovative projects.

• Stephen Chalk - 25 years of hotel, resort and condo-multifamily development experience. He

has 15 years experience in the Food Service Industry. Within the last 18 years he has been

an integral part in the development, consulting and supply in various, mostly luxury, hotels in

the US, Europe and Caribbean. His clients include Ritz Carlton, Four Seasons, Millennium,

Extel Developments, Marriot, Jack Nicklaus Organization, and numerous of well known

developers and finance partners.

• Mr. Weinstein and Mr. Chalk are principals in Olympic 1401 Elm Associates, LLC, the

entity formed to redevelop1401 Elm Street building.

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The Olympic Project Project Funding Sources and Uses

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Sources Amount % Uses

Private Equity $45,383,000 30% Acquisition and Construction

Senior Loan $50,780,000 34% Construction

Mezzanine Loan $55,120,000 36% Construction

$151,283,000

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The Olympic Project Proposed TIF Funding

• Majority of proposed TIF funds will be used to reimburse

environmental remediation/demolition, public infrastructure costs

and façade improvements

• The Olympic project would not occur, but for TIF funding

• Proposed TIF funding shall not exceed $50M, $45M principal

with up to $5M in interest (accruing at a fixed rate equal to that of a municipal bond on the day of

City Council approval, as determined by the City’s Financial Advisor)

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Description Amount

Redevelopment of Vacant/Underutilized Downtown Buildings

Environmental Remediation and Demolition (includes costs of environmental site assessment costs)

$14,020,000

Street/Utility Improvements (includes streetscape improvements) $3,000,000

Façade Improvements $24,000,000

Economic Development TIF Grant (offsets portion of costs for stair park only)

$1,880,000

Architectural/Engineering $2,100,000

Total TIF Base Funding Proposed $45,000,000

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The Olympic Project TIF Board Funding Recommendation

• On November 18, 2013, the Downtown Connection

TIF District Board of Directors reviewed and

approved TIF funding for the Olympic project in an

amount not to exceed $50,000,000, $45,000,000 in

principal and up to $5,000,000 in interest.

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The Olympic Project Highlights of TIF Funding Conditions • Minimum private investment $100,000,000, construction and construction related

soft costs

• Redevelopment shall include a minimum of 452,000 square feet:

• Minimum 25,000 square feet of retail/restaurant space

• Minimum 387,000 square feet (approximately 400 residential units) of residential space,

inclusive of resident storage space

• Minimum 40,000 square feet of office space

• Renovation and maintenance of a public observation deck on the 50th floor of

building

• Creation of an outdoor public plaza on a portion of the 9th floor of building

• Start construction and/or demolition for the Project by August 31, 2014;

• Provide proof of project financing by August 31, 2014;

• Certificate of Occupancy (CO) for the Project by December 31, 2016;

• 25% of total net leasable commercial (non-residential) space with a minimum of

50% of ground floor space must be occupied prior to TIF payment;

• Project shall be managed by a management company acceptable to Director

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The Olympic Project Highlights of TIF Funding Conditions (Continued)

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• Mixed Income Housing Requirement: A minimum of 10% of the Project’s residential

units must comply with the City’s Mixed Income Housing Guidelines for the City

Center TIF District

• Market the apartments pursuant to an affirmative fair housing marketing plan;

• Final acceptance of public infrastructure improvements from Public Works and

Transportation Department by December 31, 2016;

• Execute Operating and Maintenance agreement for public infrastructure

improvements by December 31, 2016, for 20 years;

• Construction shall be in general conformance with site plans approved by the

Downtown Connection TIF Board of Directors and Dallas City Council;

• Submit quarterly status reports for ongoing work on the project

• 25% MWBE participation for TIF reimbursable improvements; 25% Good Faith

Effort for private construction

• Project deadline can be extended 12 months, with Director and Downtown

Connection TIF District Board of Directors approval

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Strategic Importance of Proposed Project

• Activates the largest remaining vacant building in the core

• Adds to the residential population downtown

• Improves pedestrian connections to the Akard Street light rail station;

improvements will be made to the DART station on both sides

• Located on the DART Line, project support DART Light Rail ridership

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Remaining Downtown Projects/Priorities

• $90M left for project funding

• Projects Anticipated to Request

TIF Funding:

• Statler Hotel/Old Library

• 1712 Commerce

• Ross/Field Project

• Spire Project

• Praetorian Block

• Thanksgiving Tower Plaza Area

• 411 N. Akard Street

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Ross/Field Project

Statler/Old Library

Spire Project

Thanksgiving Tower

Plaza Area

411 N. Akard

1712 Commerce

Praetorian

Block

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Recommendation

• Staff requests ECO Committee’s approval of consideration of

a development agreement with Olympic 1401 Elm Associates,

LLC for TIF reimbursement not to exceed $50,000,000,

$45,000,000 in principal and up to $5,000,000 in interest for

the Olympic project by City Council at their January 22, 2014

Council meeting.

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APPENDICES

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Appendix A: Project Requirements/Other

Information

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The Olympic Project Facts

Minimum Residential Space (required) 387,000 s.f.

Approx. 400 Units

Minimum Affordable Housing Units 40 Units or

10% of Total Residential Units

Minimum Office Space 40,000 s.f.

Minimum Retail Space 25,000 s.f.

Parking Spaces 925

Required Private Investment – (construction hard and soft costs) Min. $100,000,000

Expected Total Project Cost $151,283,000

TIF Funding $45,000,000 + up to $5,000,000 interest

% TIF funds to total project cost 33.05%

Return on Cost without TIF 5.10%

Return on Cost with TIF 7.70%

Deadline to Obtain Building Permit August 31, 2014

Deadline to Obtain Final CO December 31, 2016

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Appendix B: The Olympic Project Project Proforma

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The Olympic Project Proforma


PROJECT DESCRIPTION: 1401 Elm Street

PROJECT TYPE: Mixed Use (Residential, Retail, Office, Parking)

CONSTRUCTION START DATE: August 31, 2014

PROJECT SCHEDULE: December 31, 2016

Residential Units SF # of Units Avg SF

Total/Avg 494,126 512 965

Use Breakdown SF Total Leasable/Rentable SF

Residential (including storage space) 535,371 1,123,626

Retail 71,555

Office 71,133 Total Bldg SF (Gross)

Amenity Space (rentable space on publically accessible areas) 15,497 1,502,432

Parking (sub-surface and building podium) 430,070

Back of House and Common Areas 378,806

Revenue

Project Costs Residential Revenue $9,072,153

Hard Cost $105,521,000 Retail Revenue $1,775,861

Soft Cost (less Developer Fee) $20,822,000 Office Revenue $1,138,128

Acquisition $20,600,000 Parking Revenue $738,150

Total Project Cost (without City $) $146,943,000 Total Revenue $12,724,292

Expenses

Total Project Cost $146,943,000 Residential Expenses ($997,937)

TIF Assistance $50,000,000 Parking Expenses ($280,497)

Net Cost to Developer (after TIF reimbursement) $96,943,000 Common Area Maintenance ($479,446)

Utilities, Property Taxes, Insurance ($3,053,830)

Return on Cost Analysis Management Fees ($445,350)

NOI/Total Project Costs Total Expenses ($5,257,060)

Return on Cost (without City $) 5.1% NOI $7,467,232

Return on Cost (with City $) 7.7% Notes: Stabilized rates in year 5; Revenue reflects vacancy rates for Residential 10%, Retail

15% , Office 20%, Parking 5%

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Downtown Connection TIF District Reimbursement Queue

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Reimbursement Queue As of September 2013

1 Stoneleigh Hotel 5/30/2010 Completed $2,500,000 $0 $2,500,000 Yes To Be Paid

2 Hall Lone Star2 5/30/2010 Completed $852,764 $2,000,000 $2,852,764 No To Be Paid

3 Santa Fe IV - Aloft Hotel 5/30/2010 Completed $4,296,264 $0 $4,296,264 No To Be Paid

4 Grand Ricchi Dallas - 1600 Pacific 10/26/2010 Completed $8,830,000 $4,040,200 $12,870,200 No N/A

5 Joule Hotel Expansion 1/19/2011 Under Construction $20,658,500 $0 $20,658,500 No N/A

6 Atmos Complex Phase I 6/20/2011 Completed $3,250,000 $3,000,000 $6,250,000 No N/A

7 Joule Hotel Expansion Amendment 8/10/2011 Under Construction $3,194,409 $0 $3,194,409 No N/A

8 Continental Building³ 9/16/2011 Under Construction $13,305,700 $4,222,588 $17,528,288 No N/A

9 Atmos Complex Phase II 5/21/2013 Approved $11,750,000 $5,000,000 $16,750,000 No N/A

10 Hall Lone Star Project - Phase II² 8/22/2013 Approved $5,000,000 $0 $5,000,000 No N/A

TBD 1914 Commerce Street TBD Approved $13,168,950 $0 $13,168,950 No N/A

TBD 1954 Commerce Street TBD Approved $3,020,350 $0 $3,020,350 No N/A

TBD 1401 Elm Street TBD Approved $30,000,000 $0 $30,000,000 No N/A

TBD PetroCorrigan Project TBD Under Construction $10,300,000 $0 $10,300,000 No N/A

TBD 500 S. Ervay TBD Approved $5,000,000 $0 $5,000,000 No N/A

TBD LTV Tower Project TBD Approved $17,500,000 $0 $17,500,000 No N/A

$170,889,725

Notes:1The priority ranking of an approved project is established by the submittal of evidence to the City of an executed construction loan and building permit for the project.2Hall Lone Star Project, Phases I and II, is eligible to receive up to $2M in interest. The full $2M in interest is shown in Phase I of the project.3The Total TIF Reimbursement for the Continental Building project is $22,528,288 (includes an additional $2.5M in bond proceeds).4Based on the development agreement for the project, reimbursement may take the form of project generated increment only or project generated increment plus

shared increment.

Reimbursement

Priority1

Project Generated

Increment Only4

Reimbursement

StatusProject Name

Priority

Date Construction Status

Primary TIF

Reimbursement

Maximum

Interest

Total Eligible TIF

Reimbursement

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Downtown Connection TIF District Budget Status

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B C B - C

Category

Estimated

Total Dollar

TIF Budget

Allocated³

Estimated

Total Dollar

Balance

Catalyst Projects: - Environmental remediation,

demolition, historic façade, restoration, street/utility

improvements & streetscape improvements, land

acquisition, and non project costs, including, but not

limited to machinery, equipment, materials and s $68,000,000 $68,000,000 $0

Redevelopment of Vacant/Underutilized Downtown

Buildings, Underdeveloped Parcels, Surface Parking

Lots - Environmental remediation, interior/exterior

demolition, historic façade restoration, street/utility

improvements, land acquisition, TIF grants, affor $281,262,378 $170,889,725 $110,372,653

Uptown/Downtown connection improvements $0 $0 $0

Park and plaza design and acquisition $3,335,415 $0 $3,335,415

Affordable Housing² $3,000,000 $2,000,000 $1,000,000

Retail Initiative/Streetscape Improvements $1,985,000 $459,845 $1,525,155

Downtown Area Plan $515,000 $512,464 $2,536

Administration and Implementation $6,512,935 $617,914 $5,895,021

Debt Service (Interest Only) $150,363,000 $150,363,000 $0

Total Project Costs $514,973,728 $392,842,948 $122,130,780

project

²The Affordable Housing line item has been reduced by the amount of money allocated to the Continental

³The Allocated total shown for the Redevelopment of Vacant/Underutilized Downtown Building line item reflects the

total TIF District's commitment to projects currently in the Reimbursement Queue


Current Projected Increment Revenues to Retire TIF Fund Obligations

¹TIF Budget shown above in total dollars; TIF Project Plan shows the budget in net present value.

Remaining Funds for Projects $110,372,653 (see budget)

Plus Savings from Aloft Project $ 559,845

Less Additional 1401 Elm Request $ 20,000,000 ($30 million previously budgeted for the building)

Total Remaining Funds for Project $ 90,932,498

Projects Anticipated to Request TIF Funding

• Statler Hotel/Old Library

• 1712 Commerce

• Ross/Field Project

• Spire Project

• Praetorian Block

• Thanksgiving Plaza Area

Budget values may fluctuate as a result of district

property value changes as provided by DCAD,

completion of projects within the district, changes in

tax rates for taxing jurisdictions, etc.

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260 Peachtree Street, Atlanta: This former east

coast headquarters of Sun Life Insurance was

gut renovated from a single tenant use including

complete asbestos remediation, exterior and

interior renovations, creation of an award

winning lobby, health club, dining club and other

amenities to create a class A multi-tenant office

building in the heart of downtown Atlanta.

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Appendix C: The Olympic Project Development Team – Examples of Work

145 East 32nd Street, New York City: This 1920’s office

building was completely restored on the exterior and lobby to

its original beauty and gut renovated and modernized on the

interior. Substantial environmental remediation was required.

All systems were replaced. The building was then fully leased

including both the retail and office components.

.

One Atlantic Street, Stamford: This magnificent 1920’s

office building was restored to its original exterior detail

and the lobby and major interior features were

recreated. The original bank hall was restored including

recreating fixtures and architectural details. The office

floors were gutted and fully modernized.

Flora Lofts Project Downtown Connection/City Center TIF Districts


January 6, 2014

2

Purpose

• Provide background information on Downtown

Connection TIF District

• Review the Flora Lofts Project

• Obtain Economic Development Committee’s

approval for consideration of the project by City

Council on January 22, 2014

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Downtown Connection TIF District Background

• Created June 2005

• Project Plan and Reinvestment Zone

Financing Plan originally approved

August 2005, amended May 2013 to

increase budget for district

• Expires December 31, 2035, or when

approximately $514.9 million in TIF

increment has been collected (NPV of

$231.6 million)

• Established to fund projects creating a

greater density/critical mass of

development within an expanded

Downtown core with focus on

strengthening connectivity to/between

the core and growing downtown areas

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Flora Lofts Project Location Map • Located in the Downtown Connection TIF District

• Located in the Arts District with close proximity to City of Dallas public investments

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Flora Lofts Project Project Description • Mixed use project:

• Residential for local working artists – 39 Affordable Units & 7 Market Rate Units • 4 Units at 30% AMFI

• 10 Units at 50% AMFI

• 25 Units at 60% AMFI

• Ground Floor Retail – 8K square feet

• Underground Parking Garage – 215 parking spaces • Affordable Residential – 30 parking spaces

• Market Rate Residential – 16 parking spaces

• Leasable Spaces - 169

• Surface Parking – 55 parking spaces (in addition to parking garage spaces)

• Project Cost: $24,527,802

• Start Construction: 05/2014

• Complete Construction: 12/2015

• Design Review: Design Peer Review Panel (03/22/2013) reviewed and

approved design of project

• Low Income Housing Tax Credits: The project has been approved for tax

credits for the residential portion of the project

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Flora Lofts Project Project Design

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Flora Lofts Project Project Sponsorship – Arts District Properties, Ltd • GRAHAM GREENE AIA has engaged, over the last 30 years, in the ownership and investment of

complex multi use developments consisting of mixed income housing, urban retail and educational

facilities. He has been a primary catalyst for and held a majority ownership in the realization of

over 1 million square feet of high density urban development in Dallas, Texas. Each project is

conceived to fit a unique situation or specialized need where the standard production oriented

developers have shown little interest.

• GRADY (BUDDY) JORDAN JR. Real estate investor/developer for more than 40 years in DFW

and Oklahoma. Former tax CPA & Management Consultant (Coopers & Lybrand). Developed

more than 3 million square feet of commercial and residential space. Currently active in

development of 1701 Canton, 508 Park, 515 Park, Las Colinas Equestrian

Center. Charitable/Civic engagements include – Elder of First Presbyterian Church, Director of

Interfaith Housing Coalition, Director of North Texas Education Finance Corp.

• JOHN WESLEY MILLER is a CPA with an extensive real estate background. He began his public

accounting career with Price Waterhouse and Ernst & Young (5 years in audit and tax

departments.) Mr. Miller has been self employed since 1993 and currently serves on two Dallas

TIF boards (Deep Ellum and Farmers Market). Previous experiences include development and

management of suburban office buildings, (250,000sf), adaptive reuse of historic buildings in an

urban setting (over 700 residential units), loan workout and management of troubled loans (loan

portfolio management of $1,000,000,000), multiple aspects of operational management of REO

assets ($500,000,000), operation oversight of Arts District parking (10+ years).

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Flora Lofts Project Project Funding Sources and Uses

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Sources Amount % Uses

Private Equity $5,485,925 22% Land Value and Construction

Low Income Housing Tax Credits $5,000,000 20% Construction

City of Dallas Home Funds Loan $1,100,000 5% Construction

Construction Loan $12,941,877 53% Construction

$24,527,802

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Flora Lofts Project Proposed TIF Funding • Proposed TIF funding will provide inexpensive public parking for cultural district/park

patrons in an optimal location within the Arts District

• City will enter into a lease of spaces in the parking garage in an amount not to exceed

$2M

• Independent appraisals were conducted to establish fair market rental rate for the lease

• The appraisals support a rental rate of $200/space/month

• At this rate, the City will lease 50 parking spaces for 15 years in the garage

• These spaces will provide short-term public parking spaces at a reduced rate in the Arts

District

• The City will make annual payments to the owner

• Lease payments will be funded from the City Center TIF District’s Parking Initiative

budget line item

• Sharing of revenue generated by City leased spaces is being negotiated with Owner

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Flora Lofts Project TIF Board Funding Recommendation

• On May 9, 2013, the City Center TIF District Board

of Directors reviewed and approved TIF funding to

lease parking spaces in the parking garage

component of the Flora Lofts Project in an amount

not to exceed $2,000,000.

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Flora Lofts Project Highlights of TIF Funding Conditions • Minimum private investment of $12,000,000 for construction and construction

related soft costs for residential and parking garage components of Project

• Minimum 30,000 square feet of residential space (approximately 37 units)

• Minimum 5,000 square feet of retail and office space

• Minimum 85,000 square feet of below ground parking (approximately 200 parking

spaces)

• City will lease 50 spaces in the parking structure

• Lease term 15 years

• Total amount of TIF funding shall not exceed $2M

• City will make annual lease payment on or by July 1st

• City leased spaces shall serve transient/public parking, excluding office, valet,

special event contract parking and resident parking

• Owner shall fund all maintenance and operating expenses for the garage, including

security

• Start construction and/or demolition by September 30, 2014

• Obtain Certificate of Occupancy (CO) by December 31, 2015

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Flora Lofts Project Highlights of TIF Funding Conditions (Continued)

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• Obtain final acceptance of public infrastructure improvements from the Public Works

and Transportation Department by December 31, 2015

• Operating and Maintenance agreement for public infrastructure improvements

December 31, 2015, for 20 years

• Mixed Income Housing: A minimum of 10% of the Project’s total residential units

must meet District’s Mixed Income Housing Guidelines (85% of units are affordable)

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Strategic Importance of Proposed Project

• Provides affordable housing for artists in the Arts District

• Provides inexpensive short term public parking for cultural district/park

patrons at a convenient location within the Arts District

• Provides parking solutions for under parked buildings in the Arts District

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Recommendation

• Staff requests ECO Committee’s approval of consideration of a lease

agreement with Arts District Properties, Ltd. for parking spaces in the

parking garage component of the Flora Lofts project by City Council at their

January 22, 2014 Council meeting.

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APPENDICES

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Appendix A: Project Requirements/Other

Information

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Flora Lofts Project Facts

Minimum Residential Space (required) 305,000 s.f.

Approx. 37 Units

Affordable Housing Units Provided 37 Units

Market Rate Units Provided 9 Units

Minimum Retail Space 5,000 s.f.

Minimum Parking Space 85,000 s.f.

200 spaces

Required Private Investment (construction hard and soft costs) Min. $12,000,000

Expected Total Project Cost $24,527,802

Cost of Parking Garage (construction hard and soft costs) $10,336,126

TIF Funding $2,000,000

% TIF funds to total project cost 8.15%

Deadline to Obtain Building Permit May 31, 2014

Deadline to Obtain Final CO December 31, 2015

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Appendix B: Flora Lofts Project Project Proforma

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Flora Lofts Project Proforma

Downtown Connection TIF District PROJECT ADDRESS: 2121 Flora Street

PROJECT TYPE: Mixed Use (Residential, Retail, Parking)

CONSTRUCTION START DATE: May 31, 2014

PROJECT COMPLETION DATE: December 31, 2015

SF # of Units Avg SF

Residential Units 44,233 47 941

Use Breakdown SF Total Leasable SF

Residential 44,233 142,016

Retail 10,078

Garage (include parking lobby) 87,705 Total Bldg SF (Gross)

Common Areas 6,902 163,098

Revenue

Project Costs Residential Revenue $556,248

Total Cost $21,744,862 Retail Revenue $313,746

Land Cost $2,782,940 Parking Revenue $1,126,320

Total Project Cost (without City $) $24,527,802 Total Revenue $1,996,314

Total Project Cost $24,527,802 Expenses

TIF Assistance $2,000,000 Residential Expenses ($248,189)

Net Cost to Developer (after TIF reimbursement) $22,527,802 Retail Expenses (includes 20% Vacancy) ($115,647)

Parking Expenses ($427,371)

Return on Cost Analysis Total Expenses ($543,018)

NOI/Total Project Costs

Return on Cost (without City $) 4.1% NOI $1,010,673

Return on Cost (with City $) 4.5%

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.

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Appendix C: Flora Lofts Project Development Team – Examples of Work • 1900 Elm / Titche-Goettinger Building

230,000sf / 130 Residential Lofts, Retail and Parking

• 1901 Main / Dallas Universities Center Higher Education Facility

450,000sf Adaptive Reuse of Commercial Property into Higher Education Facility

• 3311 Elm / 3300 Main / 3401 Commerce

320,000sf / 140 Historic Residential Live/Work Loft Units / Parking

• 3200 Main Street

• 60,000sf Mixed-Use Building / 61 Residential Live/Work Loft Units, Retail, Theater

and Parking

• Hillcrest House HIV / Shelter + Care SRO Housing

• 43,000sf / 70 Units Permanent Supportive Housing / Parking

• Prince of Wales / Life Net Center / SRO Residential Hotel

35,000sf / 63 Units Permanent Supportive Housing / Parking

Department of Sustainable Development and Construction

Amendments to Variances to

Alcohol Spacing Requirements

Chapter 6, Alcoholic Beverages

City Council


January 6, 2014

City Council Economic Development Committee – January 6, 2014

Background Alcohol-based Zoning Uses

•Dallas has three alcohol-based zoning uses:

– Alcoholic beverage establishment, which has

three subuses:

• Bar, lounge, tavern

• Microbrewery, microdistrillery, or winery

• Private-club bar

– Liquor store

– Alcoholic beverage manufacturing

•Other zoning uses can have alcohol permits, typically:

– General merchandise or food store (grocery store,

convenience store)

– Restaurant

2


Background Wet Areas

•Dallas now has two wet areas:

– The historic fully-wet area (northwest Dallas, Downtown,

east Dallas, South Dallas) allows all types of alcohol permits.

– The local option election on November 2, 2010 created a

newly wet area (North Dallas, Oak Cliff, Far South Dallas)

that allows:

• Beer and wine for off-premise consumption (grocery

stores, convenience stores, liquor stores that sell only

beer or wine)

• Mixed beverages (beer, wine, cocktails) in restaurants

with a food and beverage certificate

– Alcohol manufacturing (brewery, winery, distillery) is allowed

in any area that is wet for the sale of that type of alcohol.

3


Background Spacing Regulations

• Texas Alcoholic Beverage Code (TABC) 109.33(a) authorizes

the City Council to adopt alcohol spacing regulations.

• Dallas City Code 6-4(a) adopts the TABC spacing requirements.

• Cities are pre-empted from regulating alcohol, except as

allowed by the TABC, so our spacing requirements must

match the TABC.

• Section 6-4(a) requires that alcohol businesses be spaced at

least 300 feet from churches, public or private schools,

public hospitals, day-care centers, and child-care facilities,

and spaced 1,000 feet from designated public or private

schools.

• TABC Section 109.33(e) allows the City Council to grant

variances from these spacing requirements.

4


Background Evolution of the Variance Ordinance

• Ordinance No. 25465 (December 8, 2003)

– Prohibited any variances from the spacing regulations.

• Ordinance No. 27747 (November 9, 2009)

– Allowed variances only for grocery store with 50,000 square feet of

floor area and a BQ wine and beer retailer’s off-premise permit.

• Ordinance No. 28444 (October 26, 2011)

– Reduced floor area for grocery stores from 50,000 square feet to

30,000 square feet.

– Also allowed variance for:

• BG wine and beer retailer’s permit with a food and beverage certificate

• MB mixed beverage permit with a food and beverage certificate

• Restaurant without drive-through

5


Background Evolution of the Variance Ordinance (con’t)

• Ordinance No. 28565 (February 22, 2012)

– Exempted Deep Ellum from the alcohol spacing

regulations

• Ordinance No. 28799 (September 26, 2012)

– Reduced floor area for grocery stores from 30,000

square feet to 10,000 square feet

– Deleted the requirement that the front door of the

alcohol business not face the protected use

6


Background Current Standards for a Variance

• The application must be for a: – wine and beer retailer's permit pursuant to

Chapter 25 of the TABC with a food and beverage

certificate;

– wine and beer retailer's off-premise permit

pursuant to Chapter 26 of the TABC; or

– mixed beverage permit pursuant to Chapter 28 of

the TABC with a food and beverage certificate,

7


Background Current Standards for a Variance (con’t)

• The application must be for one of the

following uses as defined in the Dallas

Development Code:

– a general merchandise or food store with

10,000 square feet or more of floor area; or

– a restaurant without drive-in or drive-

through service

• Alcoholic beverages may not be sold by

drive-in or drive-through service.

8



• City Council must find that enforcement

of the spacing requirements in this

particular instance:

– is not in the best interest of the public;

– constitutes waste or inefficient use of land

or other resources;

– creates an undue hardship on an applicant

for an alcohol permit;

9



• City Council must find that enforcement

of the spacing requirements in this

particular instance:

– does not serve its intended purpose;

– is not effective or necessary; or

– for any other reason that the City Council,

after consideration of the health, safety,

and welfare of the public and the equities

of the situation, determines is in the best

interest of the community

10



• City Council may impose reasonable

conditions on the variance.

• A variance is valid for subsequent renewals

of the alcohol permit.

• The variance may not be transferred to

another location or to another alcohol permit

holder.

11


Background Variance Applications Processed

• To date, staff has received a total of 21

variance applications.

– 11 applications were approved for general

merchandise or food stores.

– 6 applications were approved for restaurants.

– 2 applications are pending January City Council

hearings for general merchandise or food stores.

– 2 general merchandise or food store applications

were withdrawn.

12


Variance Application Process

• The application fee is $1,200.

• Notification signs must be posted on the

property within 14 days after the application is

submitted.

• Not less than 10 days before the city council

hearing, the director must:

– publish notice in the newspaper;

– send notice to neighborhood associations in the

area (via email to the department’s early

notification list); and

– send notice to the protected use

13


House Bill 2818

• HB 2818 became effective September 1, 2013.

• Allows the following permits in an area that has the wet-dry status of Dallas’ newly wet area if the permit holder also has a food and beverage certificate: – BG wine and beer retailer’s permit (TABC Chapter 25)

• Currently eligible for variances

– BE retail dealer’s on-premise license (TABC Chapter 69) • Currently not eligible for variances

– BL retail dealer’s on-premise late hours license (TABC Chapter 70) • Currently not eligible for variances

14


Breweries, Distilleries, and

Wineries • Ordinance No. 28700 (June 27, 2012) created a new

“microbrewery, microdistillery, or winery” sub-use for facilities 10,000 square feet or less. – Allowed in Industrial zoning districts with RAR

– Allowed in CR, RR, CS, Central Area, Mixed-Use, Urban Corridor, and Walkable Urban Mixed-Use zoning districts only by SUP

• Ordinance No. 28700 also created a new use, “alcoholic beverage manufacturing,” for facilities greater than 10,000 square feet. – Allowed in Industrial zoning districts with RAR

– Allowed in Central Area districts only by SUP

• Currently, any size brewery, distillery, or winery cannot apply for a variance from the alcohol spacing requirements.

15


Purpose of Briefing

• Determine if City Council wants to add the

permits addressed in HB 2818 to be eligible

for applying for an alcohol variance.

• Determine if City Council wants to add

alcoholic beverage manufacturing permits to

be eligible for applying for an alcohol

variance.

– An inquiry was received for a proposed brewery

located within 300 feet of an open-enrollment

charter school.

16


Code Amendment Options

1. Amend the spacing requirements to allow

variances for the permits allowed by HB

2818.

2. Amend the spacing requirements to allow

variances for breweries, distilleries, or

wineries.

3. Amend the spacing requirements to allow for

variances for any kind of alcohol permit, and

let City Council evaluate applications on a

case-by-case basis.

17


Next Steps

• Schedule for City Council consideration

18

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DALLASECONOMICDEVELOPMENT

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Highway

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Documents

Welcome to the City of Dallas, Texas Meeting...• Project Plan and Reinvestment Zone Financing Plan originally approved August 2005, amended May 2013 to increase budget for district